ECCB 2016/2017 Annual Report

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ECCB ANNUAL REPORT 2016/2017

EASTERN CARIBBEAN CENTRAL BANK Eastern Caribbean Central Bank Notes to the Financial Statements March 31, 2017 (expressed in Eastern Caribbean dollars) 2. Summary of significant accounting policies …continued p) Other liabilities and payables …continued Other liabilities and payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method. q) Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. The Bank recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the Bank’s activities, as described below. Interest income and expense Interest income and expense for all interest-bearing financial instruments are recognised within “interest income” and “interest expense” in the statement of profit or loss for all instruments measured at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Bank estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but does not consider future credit losses. The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest to discount the future cash flows for the purpose of measuring the impairment loss. Commissions’ income Commissions are generally charged on transactions with commercial banks and other institutions except participating governments, and are generally recognised on an accrual basis when the service has been provided. Transactions that attract commissions include purchase and sale of foreign currency notes and balances and issue and redemption of Eastern Caribbean currency notes. Other income Licence fees due under the Revised Banking Act, are fixed and non-cancellable and are recorded in profit or loss when due. Income from banking licence fees are reported in the statement of profit or loss in the ‘other income’ grouping. NOTES TO THE FINANCIAL STATEMENTS ri bean do lars) March 31, 2017

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